2024 (10) TMI 325 - AT - Central Excise

SSI exemption under N/N. 8/2003-CE - use of brand name of others - factory is situated in a rural area - main contention of the learned counsel for the appellant is that the SSI exemption is available to them even if the goods are manufactured under the brand name as they are manufactured in a rural area and, therefore, are covered under Para 4(c) of the Notification - HELD THAT - Para-4 of the notification denies the exemption in respect of specified goods bearing a brand name or trade name, whether they are registered or not of another person and further sets out the exceptions. The sub-clauses (a) to (e) of Para-4 enumerates various exceptions in which case even if the goods are bearing the brand name or trade name would be entitled to the exemption under the notification. Each clause is an independent clause which provides for specific exemption and, therefore, has to be dealt within the terms of the expressions used therein. Here, we are basically concerned with clause (b) and (c) of Para-4 as relied on by the Adjudicating Authority and the appellant respectively - The goods covered under clause (b) are not restricted to any particular area but only to the entitles specified therein whereas clause (c) restricts the exception only to rural area and hence, the two operates in different spheres and cannot be clubbed together for the purpose of interpretation. Support drawn from the decision of the Apex Court in COMMISSIONER OF C. EX., TRICHY VERSUS RUKMANI PAKKWELL TRADERS 2004 (2) TMI 69 - SUPREME COURT , where the findings of the Tribunal that the exemption can be denied only if trade name or brand name is used in respect of the same goods, for which the trade mark is registered, were rejected observing that the Tribunal has done something, which is not permissible to be done in law. Considering the different expression used in the clause (b) and (c) of para-4 of the Notification, the intention of the department in granting and restricting the exemption is evident and the law is settled that where the words used are simple and clear and there is no ambiguity, no further aid is required to interpret them. Secondly, the exemption notification has to be construed strictly within the four corners of the expression used in the notification - the appellant is entitled to avail the SSI exemption benefit under the provisions of Para-4(c) as their factory is located in a rural area and the benefit cannot be denied for the reason that they have been manufacturing the goods bearing the brand name i.e. NOBLE , FITWELL and ZINDAL , which belong to M/s.Nootan Polymers. The appellant is entitled to avail the exemption under Para-4(c) of the notification, the impugned order deserves to be set aside - Appeal allowed.

Summary

Issues:
1. Entitlement to SSI exemption under Notification No.8/2003-CE.
2. Interpretation of Para-4(b) and Para-4(c) of the notification.
3. Applicability of extended period of limitation and imposition of interest and penalty.

Analysis:

Entitlement to SSI Exemption:
The appellant, engaged in manufacturing HDPE Pipes, claimed SSI exemption but faced challenges due to using brand names of other companies. The appellant argued for exemption based on manufacturing in a rural area, emphasizing the location of their factory. The Revenue contended that goods bearing another person's brand name are ineligible for SSI exemption. The Tribunal analyzed the notification's provisions, particularly Para-4(b) and Para-4(c), to determine eligibility. The appellant's location in a rural area under Para-4(c) was deemed sufficient to qualify for the exemption, despite using external brand names.

Interpretation of Para-4(b) and Para-4(c):
Para-4 of the notification specifies exceptions to SSI exemption for goods bearing brand names of other entities. The Tribunal distinguished between Para-4(b) and Para-4(c), highlighting that Para-4(b) applies to specific entities' brand names, while Para-4(c) is area-based, focusing on goods manufactured in rural areas. The Tribunal emphasized the clear language of Para-4(c) and rejected attempts to merge it with Para-4(b) for interpretation purposes. Citing legal precedent, the Tribunal upheld that the appellant qualified for SSI exemption under Para-4(c) due to their rural area location, despite using external brand names.

Applicability of Extended Period of Limitation:
The appellant faced allegations of evading excise duty and GST, leading to a search operation and subsequent legal proceedings. The issue of extended limitation period and penalties arose, with the appellant denying any malafide intent. The Tribunal, after ruling in favor of the appellant's SSI exemption eligibility, found no need to delve into other submissions. Consequently, the impugned order was set aside, and the appeal was allowed based on the appellant's entitlement to the exemption under Para-4(c) of the notification.

This detailed analysis of the judgment showcases the legal intricacies surrounding the appellant's entitlement to SSI exemption, the interpretation of relevant notification clauses, and the resolution of issues related to extended limitation periods and penalties.